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6 votes
A customer opens a savings account

that applies 4% compound interest

annually. If the initial investment is

$200.00, how much money will be in

the account at the end of two years?

Please explain

User Tushark
by
6.8k points

1 Answer

5 votes

Answer:

$216.32

Step-by-step explanation:

The formula for compound interest is given as:

A = P(1 + r/n)^nt

Where:

A = Amount after t years= ??

P = Principal = Initial amount invested $200

r = Interest rate = 4%

t = time in years = 2

n = Compounding frequency = Annually = 1

First, convert R percent to r a decimal

r = R/100

r = 4%/100

r = 0.04 per year,

Then, solve our equation for A

A = P(1 + r/n)^nt

A = 200.00(1 + 0.04/1)^(1 Ă— 2)

A = $ 216.32

The amount of money that will be in the account at the end of two years is $216.32

User Zigzagoon
by
6.0k points
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